ARGABRIGHT: A Broken Economic System

Dave Argabright

INDIANAPOLIS — The challenge is, to put it mildly, quite formidable.

The current economic system in NASCAR Cup Series racing is broken. Words like “untenable” and “unsustainable” are being used to describe the scope of the dysfunction.

The issue is not difficult to articulate: Teams are spending significantly more money — on technology, personnel and travel — than they are taking in via sponsorship and race winnings. It’s not a new issue; it’s just that the numbers have finally reached a point where it has begun to force difficult decisions and the results are visible to anyone who cares to look.

Furniture Row Racing captured the 2017 NASCAR Cup Series championship. At the end of 2018, the team closed its doors because continuing to race made no economic sense. In other words, racing was no longer feasible as a business enterprise.

Furniture Row is the canary in the mine, evidence that we are presented with a clear and present danger.
There are two ways to resolve the situation. One is to expand the revenue to cover the cost of operating a team; the second is to reduce the costs of team operation to fit the amount of available revenue.

Expanding revenue does not appear to be an immediate possibility. With static television ratings and lots of unsold tickets, it simply isn’t possible to suddenly find more revenue.

But the second solution — reducing the costs for teams — is going to be a real humdinger of a problem to address, because the sport doesn’t suffer from an economic problem as much as we suffer from a cultural problem.

The cultural problem goes back to that ageless saying made popular by Clint Brawner, the legendary late Indy car mechanic: “Speed costs money. How fast do you want to go?”

When any business looks at investing resources toward product development, every dollar spent is scrutinized against the potential return. If a new gizmo costs $50 million to develop and the potential market is only $40 million, the idea dies a quick death. But in racing, no such scrutiny is applied.

Why not? Because you can’t put a dollar value on the emotional value of winning.

The current NASCAR culture allows people to burn through money at a stunning rate. Any logical person would call it what it is: waste. But in our racing culture there is no such word.

Do you really need to completely re-body your car after every race? Only if you want to win. Do you really need to spend millions in pre-race testing and computer simulation? Only if you want to win. Do you really need to take your cars to the wind tunnel 20 to 30 times a year? Only if you want to win. Do you really need to spend $200,000 to build a stock car capable of racing 500 miles? Only if you want to win.

Furniture Row Racing team owner Barney Visser made a basic business decision: He closed the doors. For other team principals who wish to continue on, their dilemma is imminent and it is real. How do you re-shape the culture of a sport that for many years has accepted “money is no object” as normal behavior?

NASCAR is facing a very real challenge over the next five to 10 years. Ironically enough, the company itself recently laid off a number of people as it deals with declining revenues and growing costs.

If this sounds easy to fix — spec cars and cost controls — it isn’t. The cars aren’t broken; the culture is. Spec bodies and chassis would address a lot of spending, but sick racers — yes, it’s a sickness — would immediately turn their attention to other areas, looking for the most minute advantage. In the process, they would burn through money as fast as necessary. Why? Because they want so desperately to win.

Somewhere, maybe there is a person with the wisdom to know how to save racers from themselves. We can only hope that such a person is in a position of authority at NASCAR and they are smart enough — and strong enough — to lead the sport back to reality.